1. This appeal arises out of a suit instituted by the plaintiff on the basis of a deed of simple mortgage executed on 23rd July 1927, by Mohammad Raza, Muhammad Sher and Ahmad Ali. Muhammad Sher and Ahmad Ali were the first two defendants. Defendants 3 to 7, Mt. Batulan, Mohammad Ahmad Khan, Mohammad Mustafa Khan, Mt. Amna Begam and Mt. Alhamdu, were the heirs of Muhammad Raza. The other defendants were subsequent transferees. The property mortgaged consisted of two zamindari mahals and a bazar in Kamalganj. The defendants raised the plea that the mortgage deed had not been properly executed and that there, was no consideration for it, but these points were decided against them and learned Counsel no longer presses them. Defendants 8 to 14, Madan Lal, Durga Prasad, Ram Chandra, Gansi Lal, Madho Ram, Bhagwati Prasad and Hardeo claimed a right of priority under three mortgages executed on 21st April 1921, 10th August 1922 and 8th March 1926. Defendant 18, Bhajan Lal, claimed priority under two mortgages dated 2nd November 1925 and 6th December 1926. All these mortgages were upon the bazar in Kamalganj and not upon the two zamindari mahals. These defendants also claimed under the provisions of Sections 81 and 56, T.P. Act, that the two zamindari mahals should be sold before the bazar and that the bazar should be liable only for the balance of the amount left due, if any, after the sale of those mahals. There was also a defence on the basis of the Agriculturists Relief Act, it being alleged that the mortgagors and the other defendants were agriculturists, but it was held by the learned Judge of the Court below that the defendants could not take advantage of the provisions of the Act because it had not been shown that they were all agriculturists.
2. Learned Counsel for the appellants, that is, defendants 8 to 14 and defendant 18 does not press that point before us. The two questions which we have to decide are whether the appellants have a right of priority under the mortgages which we have mentioned and whether they have a right to compel the plaintiff to sell the two zamindari mahals before he sells the bazar upon which they have a charge. Upon the second point, we may mention that defendants 8 to 14 are subsequent vendees of the property in the bazar and that defendant 18 has a subsequent, mortgage upon this property. On the question of priority, learned Counsel for the plaintiff-respondent is constrained to admit that there is no doubt that defendant 18 has a prior charge and that the property must be sold subject to that charge. He undoubtedly had these two prior mortgages in his favour and no event occurred which would deprive him of his charge upon the property. About the other appellants, that is, defendants 8 to 14, the question has been raised on behalf of the plaintiff-respondent whether their mortgages were not extinguished under the deed of sale in their favour. Learned Counsel argues that the money for the redemption of these mortgages was left with these defendants-appellants at the time of the sale and ho urges that it must be inferred from this fact that the mortgages were redeemed and no longer exist. Learned Counsel for the appellants has drawn our attention to the provisions of Section 101, T.P. Act, as now in force. This section says:
Any mortgagee of ... immovable property ... may purchase or otherwise acquire the rights in the property of the mortgagor ... without thereby causing the mortgage ... to be merged as between himself and any subsequent mortgagee of ... the same property; and no such subsequent mortgagee ... shall be entitled ... to sell such property without redeeming the prior mortgage.
3. It seems to us that the terms of this section are perfectly clear. We do not say that it may not be possible for the parties to contract themselves out of this provision of law, but we consider that a contract which did operate to deprive the prior mortgagee of his charge upon the property when he became the owner of it under a sale would require to be a very clear one. It does not seem to us that a mere mention of the amounts due upon the prior mortgages at the time of the sale would be sufficient to justify the conclusion that the parties intended that the rights of the prior mortgagee should be merged in the rights of the vendee. The real fact was that the property itself was transferred to meet the charges in favour of the prior mortgagees and there was no question of paying them off by transferring any money to them. They took the property in lieu of the charge upon it and it clearly was not intended that they should lose the property upon a claim by any subsequent mortgagee whose rights were inferior to their own. We may mention that some argument has been addressed to us because a sum of Rs. 6072 was left with the vendees for payment of debts due upon certain documents and pronotes. It was urged by the plaintiff that this sum was left with the vendees for payment to him and therefore there was a special reason why he should be entitled to sell the property in the bazar for the satisfaction of his mortgage.
4. Learned Counsel for the appellants has pointed out that there is no justification for the plaintiff's allegations. The vendors entered into an agreement with the vendees to sell the property to them. This was on 31st August 1934, the agreement being made in order to settle a dispute which was the subject-matter of litigation in a Court of law. Under the agreement a deed of sale was to be executed within a period of six months and the property not only of Muhammad Sher and Ahmad Ali and the major heirs of Mohammad Raza was to be sold but also the shares of the minor heirs. The agreement was subject to permission for the sale of the minors' property. Such permission was not obtained and no deed of sale was executed within a period of six months. The deed by which the property was transferred was executed only by the majors and not on behalf of any of the minors. In the agreement it was certainly said that a sum of Rs. 3500 would be left with the vendees in order to be paid to the plaintiff, but there was no such provision in the deed of sale itself. It seems to us that the deed of sale was not strictly in accordance with the agreement because it did not transfer all the property to which the agreement related and in any event it seems to us that it is the deed of sale itself to which we must look for the terms of the contract and not some other document such as the agreement. It appears from the terms of the deed of sale that this sum of Rs. 6072 was left not for the redemption of any mortgage but for the payment of debts due upon promissory notes and other documents. There is, therefore, no justification for the conclusion that the appellants, that is, defendants 8 to 14, entered into an express covenant to pay off the mortgage upon which the plaintiff is claiming.
5. In these circumstances it seems to us quite clearly that the appellants have a right to demand under the provision of Sections 56 and 81, T.P. Act, that the two zamindari properties should be sold before the bazar. The other appellant, defendant 18, undoubtedly had a subsequent mortgage on the bazar in his favour. Learned Counsel for the plaintiff-respondent has referred us to the case in Thanmul Sowcar v. Ramadoss Reddiar ('28) 15 A.I.R. 1928 Mad. 500. It was certainly said in that case that the provisions of Section 56 and of Section 81, T.P. Act, allow the right of marshalling only if it does not prejudice the rights of a prior mortgagee and that the rights of a mortgagee would always be prejudiced if he was deprived of his right to proceed against any part of the mortgaged property, but with the greatest respect we consider that a rule of this kind would lead to the inevitable result that Sections 56 and 81, T.P. Act, would become quite meaningless. The right of marshalling would be given with one hand and taken away with the other. In our judgment it cannot be said that a prior mortgagee is prejudiced in any legal sense if he is deprived only of a choice dependent upon mere caprice. We consider that in each case one would have to examine as a matter of fact whether marshalling would cause any substantial prejudice to the prior mortgagee and that a subsequent transferee would be entitled to exercise the right of marshalling unless such substantial prejudice was caused. In the present case we cannot see what possible prejudice there can be. The plaintiff-respondent can put the three properties up to sale and have them sold in such a way that the two zamindari properties are sold first and the bazar is sold last so that the amount to be recovered by the mortgagee from the sale of the bazar will be only the balance left, if any, after the sale of the other two properties. We therefore hold that the property should be sold in that order.
6. The result is that we allow the appeal and modify the decree of the learned Judge of the Court below. Our decree will direct that the zamindari properties shall be sold first and the Bazar Dariba in Kamalganj will be sold last and if the decretal money is not realized from the other two properties, then it will be realized from the Bazar Dariba in Kamalganj. Our decree will also make it clear that the Bazar Dariba in Kamalganj shall be sold subject to the mortgages in favour of defendants 8 to 14, dated 21st April 1921, 10th August 1922 and 8th March 1926 and the mortgages in favour of defendant 18, dated 2nd November 1925 and 6th December 1926. We may mention that learned Counsel for the plaintiff-respondent has urged that our decision should not be held to deprive him or any purchaser at a sale in execution of this decree from raising any objection to the validity of these mortgages on technical grounds such for example as limitation. We therefore wish to make it clear that we are deciding in this case only that these mortgages, if otherwise valid, shall not be deemed, to have been discharged by the mortgagors at the time of the sale of the property to defendants 8 to 14. We direct that the decree shall also state that the amount to be paid by the defendants shall be paid on or before 15th March 1943. The appellants will get their costs in this appeal. The order for costs in the lower Court is maintained. A decree will be drawn up according to our decision.